US sanctions necessary to stop Nord Stream 2 pipeline, speakers say
US sanctions will be necessary to stop construction of the proposed Nord Stream 2 natural gas pipeline, speakers indicated at a Mar. 12 Jamestown Foundation (JF) event.
“The project is divisive and essentially anti-European. US involvement will be crucial in strengthening European opposition to it,” said Piotr Wilczek, Poland’s ambassador to the US.
“Russia has a history of using energy for political coercion. The question is whether Europe and the US will stand together against Russian aggression,” Wilczek said.
Stephen Blank, senior fellow for Russia at the American Foreign Policy Council, said, “Nord Stream 2 clearly is a threat to Europe, which is why the Trump administration opposes it. We have now threatened that if Nord Stream 2 is built, the US will impose sanctions not just on the project, but also on the contractors.”
The US will need to solve two problems before it can respond effectively, Blank said. One is to build the necessary domestic infrastructure to get more gas to liquefaction plants and export terminals. The other is to find ways to make US LNG much more competitive in Europe, which won’t be easy, he said.
“It looks as if sanctions on Germany will need to be imposed. We’re past the 11th hour and are moving toward midnight. It’s uncertain whether the political will is there to do what’s necessary. Otherwise, [Russian President Vladimir Putin] will be encouraged to move further in a sophisticated strategy designed to use energy exports to undermine European political will,” Blank said.
Germany’s role
Other speakers suggested that Germany’s government has become invested politically in seeing the pipeline built from Russia across the Baltic Sea. “With Russia’s help, Germany has become the transit hub for Europe. The German chemical industry, one of the world’s largest, has a clear interest in securing more Russian gas,” said Vladimir Socor, a JF senior fellow.
Socor said the current government’s position toward Russian gas is an antiquated one that dates to the administration of Gerhard Schroder, Germany’s chancellor during 1998-2005. “Based on asset swaps and cross investments, Germany has made it possible to become joint owners with German partners of pipelines and storage facilities,” Socor said. “At this point, Germany is the only European country that has not embraced LNG imports.”
Margarita Assenova, a second JF senior fellow, said, “More pipelines would be helpful, but they have to come from many sources. Any dependence on a single source is bad. Dependence on Russia is a problem because of what Europe experienced in 2008-09 when Russia interrupted supplies for political purposes.”
Vadym Glamazdin, special envoy for government relations at Ukraine’s Naftogaz, said, “Russian officials from Putin on down have said from the outset that Nord Stream 2’s main purpose is to bypass Ukraine and make it an unnecessary transit point. In Ukraine, we absolutely, surely now that if Russia has a chance to do something, it always will.”
This was a clear reference to Russian gas giant Gazprom’s cutting off supplies to Ukraine for periods in 2014 and 2018, allegedly for unpaid bills. More recently, Russia briefly seized three Ukrainian patrol vessels and their crews in the Kerch Strait near the Black Sea (OGJ Online, Nov. 29, 2018).
Taking small steps now
“Russia is taking small steps now and awaiting reactions,” Glamazdin said. “None of the Baltic Sea routes have been approved, but Russia is encouraging the perception that they have.” He said that the North Atlantic Treaty Organization probably will not respond unless problems develop in the Baltic Sea.
“If Ukraine is bypassed, Eastern and Central Europe’s gas capacity will be restricted. Gas transmission systems can run in only one direction at a time. Every country west of Ukraine is connected to pipelines with much less capacity,” Glamazdin said.
Blank said, “This is a bad plan for European energy security. It’s also a device to make European reliance on Russian gas stronger. Russia even has plans to build LNG gasification terminals in Algeria to increase Southern Europe’s dependence.”
Blank noted that more European countries need to provide support to the Three Seas Initiative, a geopolitical effort Poland and Croatia began to strengthen economic cooperation among nations bordering the Baltic, Adriatic, and Black seas that includes construction of more gas pipelines.
Socor said, “Now is a perfect time for the US to step in because there’s a vacuum of power in the European where there won’t be a new parliament until 2020. The US has an opportunity to demonstrate that it’s not against the [European Union] itself, which is a misconception many Europeans hold. The US can use its energy strength now to show that it isn’t.”
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
